Online Reporter
South African equities recorded their longest monthly winning streak since early 2013, buoyed by optimism around the domestic economy, expectations of global monetary easing, and renewed appetite for emerging-market assets.
The benchmark FTSE/JSE Africa All Share Index is up 1,5 percent in October, its rise for an eighth month.
Banking, technology and telecommunications shares have led the advance, catching up with surging precious-metals stocks, amid undemanding valuations and improving sentiment toward the country.
“Macro-economic optimism as well as a rotation into emerging markets are driving gains,” said Lester Davids, analyst at Unum Capital.
“Local-facing stocks have begun to pick up, possibly driven by attractive valuations relative to global peers.”
South African stocks are part of a sustained rally in emerging markets, with the developing nation benchmark index set for a 10th monthly gain, the longest such sequence since 2004. The latest boost has come from the perceived easing of tariff frictions after a flurry of trade deals and a truce between China and the US.
South Africa’s removal a week ago from a watchdog’s dirty-money list provides a further boost, Davids said. The Paris-based Financial Action Task Force on October 24 said South Africa was among countries no longer on the list of jurisdictions subject to increased monitoring, after their governments stepped up efforts to combat money laundering and terrorist financing.
South African banking stocks have attracted buyers thanks to high dividend yields and relatively low price-to-earnings ratios, while technology investor Prosus NV and its parent Naspers have benefited from a rebound in Chinese tech stocks, said Davids. MTN Group has jumped about 20 percent this month as Africa’s largest wireless carrier benefits from rising earnings in markets like Nigeria and Ghana. — Bloomberg
